Last spring, as interest rates began slipping toward their eight-year low, a young Santa Ana homeowner thought the time might be right to refinance her $110,000 mortgage.

Like so many other homeowners attracted by the dropping mortgage rates, the woman, who asked not to be identified, knew she could reduce her monthly payments by substituting a new lower-rate mortgage.

But with only a hazy understanding of the dwindling advantages of refinancing and a lack of ready cash for the required up-front fees, the Santa Ana homeowner didn't get around to acting on her intentions. And now, reading about this spring's rising interest rates, she wonders if she has completely missed her chance to get out from under her existing loan.

"It's so confusing," she complained. "I get conflicting advice, and I'm not sure what I should do. I'm afraid to do it, and yet I'm afraid not to."

The confusion is understandable. Even the experts, the mortgage bankers and loan officers specializing in refinancings, don't agree on a common strategy.

At the heart of the issue is a lack of agreement on where interest rates are heading. In the past three months, rates have risen about 1 1/2 percentage points to about 10.5% on a 30-year fixed-rate mortgage. But whether they will continue to rise, stabilize or begin to dip is a matter of disagreement.

Where the rates are heading is important in refinancing, the experts say, because most of these moves are driven by a homeowner's desire to capture a lower mortgage rate and reduce the monthly payment.

If the rates are commonly believed to be heading down, the best course is often to wait. However, if they are on the rise, a homeowner must either act immediately or be resigned to wait for a more advantageous time. And if rates are drifting, then the decision often boils down to a homeowner's individual situation.

In general, the advice from mortgage bankers is that refinancing is not worth the effort and the cost unless the new rate is at least two percentage points below the existing mortgage and the homeowner intends to stay in the home another seven years.

In the current market, that rule of thumb would advise homeowners with mortgages of 12.5% or more to refinance. And according to mortgage lenders, thousands of homeowners fall into that category.

Of course, the best market in recent years for refinancings has apparently passed for the time being.

In 1986, according to the Washington-based Mortgage Bankers Assn., about 2.5 million homeowners took advantage of the declining rates--which eventually bottomed out at about 8.5%--and refinanced their homes. The group's research economist, Richard Peach, said about 40% of the estimated $442 billion worth of new single-family mortgages issued last year were for refinancings, about twice the normal average.

The market was so attractive, Peach added, that an estimated 5% of all U.S. homeowners refinanced their mortgages in 1986. "We believe that's a record," he said.

Despite the recent uptick in rates, refinancing still can make sense under certain circumstances.

"I would do it if I had a mortgage of 14%," said Brian Chappelle, senior director of the residential finance division of the Mortgage Bankers Assn. "And there are a surprising number of people who still have those rates."

For whatever reasons, lenders report that they are still carrying high-rate mortgages on their books, despite efforts to persuade their customers to refinance.

Sidney Lenz, executive vice president of Countrywide Funding Corp., a Pasadena mortgage banking company, said that two months ago her company alerted about 2,500 customers that they could save a minimum of $25 per month on their mortgages with a refinanced loan. However, only about one-third accepted the company's suggestion that they refinance.

Lenz speculates that some homeowners might have been waiting for rates to drop even further, a decision that in retrospect appears a little greedy. Others, she guesses, might have been put off by the costs of refinancing.

Lenders say refinancing fees typically range from 1.5% to 2% of the mortgage amount in "loan fees," also known as points, plus closing costs that include charges for a title search, credit check, land survey and termite and pest inspections. The charges usually total about 3% to 5% of the loan.

Knowing that the fees can often act as a deterrent, lenders are increasingly offering to finance the charges along with the new mortgage so homeowners do not have to come up with the cash to pay for them. Such offers have proved popular.